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State Government Revenue and Expenditures: A Bootstrap Panel Analysis

Author

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  • Chowdhury, Abdur

    (Department of Economics Marquette University)

Abstract

The current fiscal crises that most states in the United States are facing are generally the result of a severe macroeconomic downturn combined with a limited ability of the states to respond to such shocks. States are facing increased demand for public services at the same time revenue is falling. In this context, this paper explores the issue of temporal priority between government expenditures and revenue at the state and local levels. The results show that there is no uniform relationship between government revenue and spending across different states in the US. In fact, about 40% of the states show the absence of any temporal relationship between these two variables. This is quite revealing given the current state of the debate in the academic and policy-making circle. A support for the tax-spend hypothesis is found in 18% of the states while the spend-tax hypothesis is prevalent in another 16%. In 26% of the states, the revenue and expenditures decisions are jointly determined by the government.

Suggested Citation

  • Chowdhury, Abdur, 2011. "State Government Revenue and Expenditures: A Bootstrap Panel Analysis," Working Papers and Research 2011-03, Marquette University, Center for Global and Economic Studies and Department of Economics.
    • Handle: RePEc:mrq:wpaper:2011-03
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    File URL: http://epublications.marquette.edu/econ_workingpapers/14
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    Citations

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    Cited by:

    1. James W. Saunoris, 2015. "The Dynamics of the Revenue–Expenditure Nexus," Public Finance Review, , vol. 43(1), pages 108-134, January.
    2. Temel Gurdal & Mucahit Aydin & Veysel Inal, 2021. "The relationship between tax revenue, government expenditure, and economic growth in G7 countries: new evidence from time and frequency domain approaches," Economic Change and Restructuring, Springer, vol. 54(2), pages 305-337, May.
    3. Krasnopeeva, Natalia, 2023. "Revenues and expenditures of Russian regional budgets: Granger causality analysis," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 70, pages 5-33.

    More about this item

    Keywords

    state government; revenue; expenditures;
    All these keywords.

    JEL classification:

    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures

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